Kroger and Albertsons merger needed to close the gap with Walmart, executives testify

Jozette Leal, left, holds a placard as the 20-year-veteran of toiling at Safeway joins fellow union members in a protest against the proposed merger of grocery store chains Kroger and Albertsons Monday, Sept. 30, 2024, outside the City/County Building while inside the courthouse the Colorado attorney's general office presented its case against the merger in the opening day of the trial in Denver. .

Kroger aims to align Albertsons’ prices with its lower costs, benefitting consumers and boosting its sales. By the fourth year, Kroger forecasts that Albertsons and Safeway customers will enjoy $1 billion a year in savings, McMullen said.Colorado, however, won’t see the same level of benefits. That’s because only 19 stores will come under the Kroger umbrella.

McMullen and Aitken emphasized that Walmart, with 3.5 times the grocery sales of Kroger, is the key competitor not Albertsons. Kroger has built its business strategy entirely around matching Walmart’s prices and staying ahead of a host of other rivals like Costco, Whole Foods, Trader Joe’s, etc. “We have 66 units up in the mountains for our associates so they can afford to stay up there. These costs are costs we are looking to recoup,” McMullen said.Kroger developed a “flywheel” strategy to close the gap with Walmart. Lower prices on essential food staples so more customers come in the door. More sales generate more money that can be pumped back into price reductions.

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